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Q2 Lodging Fundamentals Favor Buying, Selling and Building

The economy is making for exciting times in the sector.

By Daniel H. Lesser, President & CEO of LW Hospitality Advisors LLC | Updated on April 16, 2015

NEW YORK CITY—Since the economic outlook for the United States calls for several more years of steady, sustainable growth fueled in part by net job growth and modest increases in GDP, hotel property transactions and pricing are expected to continue on their present upward trend.  Record sums are being routinely paid in many US metropolitan areas for desirable lodging assets driven in some measure by epochally low interest rates that have prevailed since the mid 2000′s. Enormous investment demand from private and institutional capital from throughout the globe is targeting hotel properties on both coasts as well as major cities within the nation’s interior.  The stars remain aligned and the fundamentals of the US lodging industry are simultaneously favorable to buy, sell, and develop a variety of lodging product types particularly in gateway American markets.

Click the image to download the accompanying fact sheet.

The LW Hospitality Advisors (LWHA) Q1 2015 Major US Hotel Sales Survey includes 38 single asset sale transactions over $10 million, none of which are part of a portfolio. These transactions totaled roughly $3.2 billion, and included approximately 11,300 hotel rooms with an average sale price per room of $280,000. By comparison, the LWHA Q1 2014 Major US Hotel Sales Survey identified 31 transactions totaling roughly $2.5 billion including 8,100 hotel rooms with an average sale price per room of nearly $310,000.  Comparing Q1 2015 with Q1 2014, the number of trades and total dollar volume has impressively increased, sales price per room decreased roughly 10 percent. Southern California, South Florida, and New York City have been the most active transaction markets.

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